What is Cash Balance? Why are you so stuck? Then what are the effects?
Let’s learn a simple way. In a matter of minutes, let’s go!
At this time, new investors may be wondering about the word ‘Cash Balance’ That appear on the news often, right?
Even though I didn’t understand it, I felt that it was insurmountable. Because after this news, however, the stock price tends to drop.
Let’s try and see what is Cash Balance exactly?
Previously, the Stock Exchange of Thailand (SET) was full of speculators. And sometimes they tend to drag the stock price up until it is very wrong from the normal situation. By using a tool such as margin account (borrowing money to buy stocks), when stock prices rise so high that retail investors go to buy stocks. Speculators will sell the shares until the share price has dropped sharply. And cause widespread damage
SET Therefore, there must be measures to prevent risk for small investors By forcing the stock with abnormal movement will be required. “Cash Balance Account” In stock trading only In other words, cash has to be put into the stock portfolio to buy. When speculators can no longer borrow money to invest. Its effect is the heat of the stock price and its volume will decrease.
Stocks that fall under this measure are called “Securities eligible for trading regulation measures”
So Cash Balance is actually just the name of one of the measures.
The factors that make stocks fall into the regulatory measures must look like this.
1. Turnover ratio is higher than the criteria set by the SET.
2. Trading value is more than the criteria set by the SET
3. Sometimes the share price ratio to earnings per share (P / E ratio) may also be used as a condition. If the trading price does not correspond to the fundamentals
At present, the SET has not clearly disclosed the conditions for the turnover ratio and the trading value to qualify for regulatory measures.
While each broker can even predict it. But they will use different criteria for calculation anyway
Stocks that fall within the scope of the three measures are governed by measures.
Level 1 : Cash Balance: When the stock is stuck, there will be a T1 sign at the end of the share name. Investors are required to purchase that stock only with a cash balance account.
The reason it is popular to call stocks that have been labeled as “ Cash Balance ” is because most of the stocks tend to get out of this measure from level 1.
Level 2 : Do not calculate the trading limit and Cash Balance, the T2 mark after the share name. This applies only when Level 1 measures are ineffective and there are additional regulations besides using cash to purchase shares. Brokers are prohibited from using this stock as collateral in calculating trading limits for all types of accounts.
Level 3 : Net settlement is prohibited, no trading limit and Cash Balance are allowed.When reaching this level, there will be T3 after the share name. What is different from the 2 levels above is Brokers must not deduct the purchase price and the selling price. Same security on the same day (Net Settlement) meaning that when we buy and sell this stock on the same day, the credit limit will not be returned. Have to wait for another business day This makes it impossible to enter and trade stocks multiple times in one day unless they have very large amounts of money.
The purpose of Cash Balance is to reduce the risk for investors. But that doesn’t mean cash balance stocks have to be bad stocks. Because perhaps the business trend of that stock will be much better. Until people hurried to buy shares As a result, the stock can stick to measures as well
New investors can click to follow the page. efinanceThai To receive news And investment knowledge at any time Admin promises to bring good knowledge. Leave it regularly ^^
–
